The Nigeria Exchange (NGX) last week grew by an additional N867.7 billion to cap at N35.7 trillion. All Share Index (ASI) rose by 0.1 percent.
This is as the crude oil price rise in the international markets failed to grow the country’s foreign reserves, leading to a widening gap across markets.
At the domestic stock market, Year-to-Date (YTD) return improved to 26.9 percent (previously 26.8 percent). Activity level dampened as average volume and value traded fell 31.7 percent and 62.0 percent to 570.9 million units and N7.5 billion week-on week (w/w) respectively.
At the global equities market, resilient corporate earnings encouraged bullish sentiment.
Last week, the global equities market performance was shaped by a mix of the International Monetary Fund (IMF’s expectation of a better growth in China, unsurprising rate hikes by the US Feds and European Central Bank (ECB), and exciting corporate earnings.
Overall, the MSCI World index rose 0.3 per cent w/w. The US market closed the week positive as investors continued to digest impressive corporate earnings releases and recent economic data.
Specifically, PCE headline inflation slowed to 3.0 per cent in June from 3.8 per cent in the prior month – further solidifying expectations of the Fed to halt its ongoing hawkish monetary campaign.
A the foreign exchange (fox) market, Brent crude oil price rose 3.9 per cent w/w to $84.00/bbl. backed by strong demand from the Sino economy as it reopens economic activities.
This also comes with supply being artificially contained by OPEC+ members and frail supply pulls from the US.
“Meanwhile, Nigeria’s foreign reserves still falls short of expected accretion from crude earnings as it declined 0.1 per cent w/w to $33.9 billion as of July 26th, 2023”, said analysts at Afrinvest.
Across the forex market last week, naira traded within a similar band to the previous week. At the Investors & Export (I&E) window activity level improved 8.3 per cent, 32,3 million to $421.6 million, leading to 0.3 per cent w/w appreciation of the naira N775.76/$. In the parallel market the dollar appreciated 0.6 per cent w/w to N870/$, bringing a weekly average spread increase of 60.6 per cent to N89.02.
At the treasury bills market, the OPR and OVN rates (interbank rates) fell 19.5ppts and 19.6ppts w/w respectively to 0.9 per cent and 1.4 per cent due to buoyant system liquidity.
Specifically, liquidity level advanced 180.2 per cent w/w to N593.0bn as higher opening balances of banks (9.0x w/w) and Federal Account Allocation Committee (FAAC) payment largesse more than offset NT-Bills outflows of N264.3 billion during the week.
The secondary market for domestic bond instruments closed the week on a bearish note as investors reacted negatively to the outcome of the MPC meeting. As such, average yield rose three basis points (bps) to 12.8 per cent backed by repricing across the curve.
Specifically, yield on the short, mid, and long-dated instruments expanded by 145bps, 25bps and 19bps respectively.
